Women's Apparel

INDUSTRIAL CODES

NAICS: 31-52 Cut and Sew Apparel Manufacturing, including the following six-digit industries: 31-5231, 31-5232, 31-5233, 31-5234, 31-5239, and 31-5291

SIC: 2341 Women's, Misses', Children's, and Infants' Underwear and Nightwear Manufacturing, 2361 Girl's, Children's, and Infants' Dresses, Blouses, and Shirts Manufacturing, 2369 Girl's, Children's, and Infants' Outerwear Manufacturing, and 2384 Robes and Dressing Gowns Manufacturing

NAICS-Based Product Codes: 31-51923 through 31-51927120, 31-52311 through 31-52319003, 31-52321 through 31-52321015, 31-52321 through 31-52323022, 31-52330 through 31-52330022, 31-52341 through 31-52347001, 31-52391 through 31-52399100, 31-52910 through 31-529102C03, and 31-52991 through 31-52995131

PRODUCT OVERVIEW

Throughout history, women wore clothing for four major reasons: protection from the elements, maintaining modesty, furnishing adornment, and fixing status. The woman of the early twenty-first century obtains clothing made in modern factories through a complex global system of trade, but her basic goals have not changed. Women want to be warm in winter, cool in summer, and both comfortable and attractive year-round. A woman choosing a designer gown in this environment is just as interested in status as was a fashionable young nineteenth century Londoner purchasing a Worth gown, or a Roman matron ornamenting her tunic with gold jewelry.

From the earliest times, humans living in cold northern climates wore fitted clothing tailored from warm furs, while those in warmer regions mainly wore draped clothing such as a Greek chiton (an oblong piece of cloth draped from the shoulders and held at the waist by a girdle) or an Indian sari.

Clothing in medieval times in Europe was based on the Roman tunic and cloak. Clothing gradually became more tailored. In the sixteenth century, women in England adopted the French farthingale, a frame of hoops made from whalebone or other light material over which skirts were draped. By the end of the seventeenth century, the farthingale was gone, and a well-dressed woman wore a short outer skirt over a longer inner one, a stomacher, and snug bodice with elbow-length sleeves. Wide skirts were back in fashion in the mid-eighteenth century. During the French Revolution, women in that country wore directoire dresses with high waistlines, low necklines, puff sleeves, and long tight skirts. The style that followed, the empire dress, was similar but had a full skirt.

Throughout these ages, clothing was made by the women of the house or tailored for women by seamstresses. Mass production of men's clothing began after the Civil War, but women's clothing continued to be custom-made into the 1920s. Development of the sewing machine had made ready-to-wear men's clothing practical. For women's ready-to-wear clothing, however, another, and perhaps more significant, hurdle was obtaining the well-dressed woman's approval and acceptance of the new mode of dressmaking.

During the 1920s the development of industrial production techniques, the rise of the advertising industry, and the growth of the urban professional class contributed to the progress of the ready-made women's apparel industry. The image of the product changed. Although the newly made clothing often fit poorly, it was viewed as modern and fashionable during a time when new consumer industries rapidly redefined the way in which Americans considered mass-manufactured merchandise. American women found ready-made apparel convenient, affordable, and up-to-date.

Nonetheless, the clothing still required extra costs for alterations in order to make it adequate. The problem was the absence of a reliable sizing system. Each manufacturer created its own exclusive and even arbitrary system and the sizes were often based on inaccurate or non-existent body measurement data. Therefore, it was a major breakthrough in women's apparel when, in the late 1940s, the Mail Order Association of America (MOAA) requested the National Bureau of Standards (NBS), now the National Institute of Standards and Technology (NIST), to conduct a study on women's body measurements in order to develop a sizing standard for ready-to-wear women's clothing. Manufacturers continued to use the standards resulting from the project to produce women's clothing through most of the twentieth century.

More studies were being conducted in the early 2000s, to update information and modernize the standards. American body types had changed since 1940, and women were taller and heavier at the turn of the century.

In the early twenty-first century, clothing is manufactured and sold in a complex pattern of manufacturers, contractors, and retailers. Major manufacturing firms in the United States design and market the clothing, with one company often owning a number of brands. To cut costs, most of these companies contract with offshore entities, in places where labor costs are low. As will be seen, however, many of these contractors, especially those near to the United States, make much of their product from fabric manufactured in the United States, as a result of trade agreements such as NAFTA (North American Free Trade Agreement) designed to protect the domestic textile industry. With quotas on Chinese clothing scheduled to disappear in 2008, however, there was considerable disagreement as to whether the tariff advantages would protect the garment industry in places like Mexico from a flood of less expensive Chinese clothing.

MARKET

As a whole, women are more enthusiastic clothes shoppers than men, and the apparel market reflects that difference. U.S. Census Bureau figures list 90,954 retail clothing stores in 2002, with 33,955 of them devoted to women and only 9,437 devoted exclusively to men. There were also 6,558 children's and infants clothing stores, where women generally do much of the shopping, and 24,539 family stores catering to both genders and all ages.

Retail sales in 2002 were listed as $120.13 billion, with $30.6 billion in sales at women's clothing stores, $7.9 billion at men's stores, $7 billion at children's stores, and $63.9 billion at family stores. Another Census Bureau report tracked monthly sales, and reported that retail sales at all clothing stores totaled $155.35 billion in 2006, with $39.41 in sales at women's clothing stores compared to $9.78 billion at men's stores.

A number of other studies by market research firms offer a look at the industry from slightly different perspective, depending on how they define the market being measured. A 2005 report by Mintel International, a Chicago-based market research firm, placed the total U.S. market for women's clothing at $77.1 billion in 2005. A study from the NPD Group reported that women spent $104 billion on apparel during the 12-month period ending in May 2007. This represented a 4 percent increase from $99.4 billion the year before. In a study by just-style, total U.S. apparel retail sales in 2006 were given as $191 billion, predicted to rise to $236 billion by 2012.

While women are enthusiastic buyers of clothing, the U.S. apparel manufacturing industry has been in sharp decline for decades. A report on the apparel industry in the Census Bureau's Current Industrial Report series showed the shipped value of U.S. apparel manufacturers at $14.07 billion for 2006, a dramatic drop from $27.08 billion in 2002 and a mere fraction of what they had been in 1997 ($47 billion). Of shipments in 2006, $7.6 billion were shipments of women's and girls' clothing.

With much manufacturing contracted to suppliers in developing nations with low labor costs, the majority of the clothing bought in the United States is imported. The U.S. International Trade Commission tracks imports and exports. The U.S. imported $70.9 billion worth of cut and sew apparel in 2006 and exported only $2.6 billion. Cut and sew apparel is produced by firms that buy the fabric and cut and sew garments from it, as opposed to those that knit cloth and make clothing from it.

This compares to $48.7 billion in cut and sew imports in 1998, and $6.1 billion in exports. For women's and girls' clothes, imports were $41.3 billion in 2006, up from approximately $30 billion in 1998. Exports dropped from $3.3 billion in 1998 to $1.2 billion in 2006. Figure 233 provides an overview of the U.S. apparel industry as a whole for the period 1997 to 2006.

By far the largest share of clothing imports to the United States come from China, 27.5 percent. For the period of January to May 2006, China exported almost $5.1 billion worth of apparel to the United States. This increased 52.7 percent by January to May 2007 to a total of more than $7.7 billion.

After China, the next biggest exporter of apparel to the United States was Mexico, with 6.5 percent of the market, according to American Apparel and Footwear Association (AAFA) figures. Indonesia was third, followed by India, Vietnam, Bangladesh, Honduras, and Cambodia.

This shift of apparel manufacturing from developed to developing nations contributed to the creation of a maze of bilateral and multilateral trade agreements. In 1974 almost all existing trade pacts were combined into one, the Multifibre Arrangement (MFA). Quotas were allowed in cases where surges of imports were damaging industry in the importing country. Because such quotas are against the rules of GATT (General Agreement on Tariffs and Trade), they were imposed as temporary measures but were extended several times.

On January 1, 1995, the Agreement on Textiles and Clothing (ATC), under the supervision of the World Trade Organization (WTO), replaced the MFA. The ATC established a 10-year transition period for eliminating quotas. It contained a safeguard mechanism, however, that allowed temporary quotas on fabric and apparel from China if these goods were causing market disruptions.

China joined the WTO in December 2001, but a specific safeguard again allowed quotas on China through 2008. With an abundance of cheap labor, China benefited greatly from WTO membership, and substantially increased its imports to developed nations, including the United States.

In response, the United States took advantage of the regulations and imposed safeguard quotas on China in 2004 and 2005. A memorandum of understanding with China in 2005 allowed quotas to remain on certain items until 2008. Once the quota in a category was reached, no more imports in that category could come from China that year. By August 2007 fears that the quotas would be reached in a number of categories before the year was out had U.S. companies scrambling to arrange production contracts with such places as Vietnam, Sri Lanka, the Philippines, Central America, and the Caribbean.

U.S. textile and clothing manufacturers also lobbied Congress to put an end to China's manipulation of its currency, which they feel gives Chinese manufacturers as much as a 40 percent trade subsidy. The U.S. Senate Finance Committee passed a bill in July 2007 which required the Treasury Secretary to identify nations with fundamentally misaligned currencies and to enter negotiations with those countries. Importers of textiles and apparel, including the retail clothing industry, opposed the bill.

The decline of the apparel manufacturing industry in the United States had a major effect on jobs, particularly women's. The 2002 Economic Census listed 10,785 cut and sew apparel manufacturing establishments with 264,557 paid employees, down from 558,328 in 1997.

The International Ladies' Garment Workers Union (ILGWU), founded in 1900, had a primarily female membership, the majority immigrants. The union reached its peak membership of 450,000 in 1968. As garment jobs began to disappear, membership declined. More than 300,000 members had been lost by the early 1990s. The ILGWU merged with the Amalgamated Clothing and Textile Workers' Union in 1995 and the new union merged with the Hotel Employees and Restaurant Employees International in 2004.

Defenders of the global economy, however, would say that the descendants of the immigrant garment workers are now filling high-tech jobs. Moreover, shoppers, a large percentage of them women, are enjoying far lower prices for clothing than would be possible without off-shore contractors.

KEY PRODUCERS/MANUFACTURERS

The enormous women's clothing market is served by a large number of companies and their well-known brands. Profiled in alphabetical order are nine:

The Gap, Inc.

Founded as a retail store in 1969 in San Francisco, California, by Doris and Don Fisher, The Gap had more than 3,100 stores in 2006 selling Gap, Banana Republic, Old Navy, and Piperlime, as well as GapBody, GapKids, and babyGap. The Fisher family controls close to one-third of the stock.

Gap is known for stocking its stores with its own brand of casual clothes for men, women, and children, featuring mainly T-shirts, jeans, and khakis. Banana Republic features urban chic clothing, while Old Navy is a budget merchandiser. All Gap products are private label, designed in-house, and manufactured by contract companies. The company says on its Web site that all factories selected to produce Gap products must meet the company's "Code of Vendor Conduct," with particular attention to such issues as child labor and working conditions. Gap reported that the company terminated business with 23 factories, 1.1 percent of the total, in 2006 for code violations. The Gap had 2006 revenues of $16 billion, net income of $778 million, and 150,000 employees.

Hanesbrands, Inc.

Headquartered in Winston-Salem, North Carolina, Hanesbrands was spun off from Sara Lee Corporation in 2006. The company, which had approximately 50,000 employees, had $4.7 billion in net sales and more than $350 million in income in 2006. Hanesbrands products include: T-shirts; bras, panties; men's underwear; kids' underwear; socks; hosiery; casual wear, and active wear. Company brands include Hanes, Champion, Playtex, Bali, L'eggs, Just My Size, Barely There, and Wonderbra.

Hanesbrands boasts that its brands can be found in eight out of ten American households. In terms of sales, its T-shirts, fleece, socks, men's underwear, sheer hosiery, and kids' underwear hold first place in the U.S. market. Its bras and panties are in second place.

Hanes Corporation grew out of two firms, each founded by a different Hanes brother. J. Wesley Hanes established Shamrock Hills, a manufacturer of men's hosiery, in 1901. In 1902 Pleasant Hanes formed the P.H. Hanes Knitting Company and introduced men's two-piece underwear. Shamrock Hills changed its name to Hanes Hosiery Mill in 1910 and began to manufacture women's hosiery. The two companies merged in 1965 to form the Hanes Corporation. In 1971 Hanes Corp. acquired Bali Brassiere Company and Pine State Knitwear Company. Just My Size for full-figured women was launched in 1984.

Levi Strauss & Co.

Founded in 1853 by Bavarian immigrant Levi Strauss, shares of Levi Strauss & Co. are privately held by family members. Its stock is not traded, but Levi Strauss Japan, a company affiliate, is publicly traded in that country.

Headquartered in San Francisco, California, Levi Strauss is the leading manufacturer of jeans and casual pants, with sales in 110 countries and more than 10,000 employees worldwide. Its brands include Levi, Docker, and Levi Strauss Signature. Net revenues for 2006 were $4.19 billion. Net income was $239 million.

The company reports that it was the first global company to develop and implement a supplier code of con-duct, and for 15 years it has monitored the employment practices of its contract suppliers. In 2006 it introduced a new program to help suppliers build management systems and capabilities that will enable them to meet these standards in the normal course of doing business.

Victoria's Secret

Victoria's Secret is a subsidiary of Limited Brands, which sells women's and men's apparel, lingerie, and beauty and personal care products at its more than 3,700 stores and online. Limited Brand sales totaled $11 billion in 2006, and the company had more than 100,000 employees that year. In addition to Victoria's Secret, brands include Bath & Body Works, C.O. Bigelow, Henri Bendel, La Senza, and the White Barn Candle Co.

Victoria's Secret lingerie and beauty products, which are known for their sexy image, are sold in more than 1,000 company stores and online. Revenues for the Victoria's Secret division in 2006 totaled $3.7 billion. With growing sales, the company began increasing the size of its stores in 2007, with 125 to 140 store projects scheduled for that year.

Liz Claiborne, Inc.

Liz Claiborne, a leading seller of women's clothes and accessories globally, sells brands that include Ellen Tracy, Laundry, Liz & Co., Concepts by Claiborne, Kate Spade, and Dana Buchman. In addition, Liz Claiborne holds the exclusive, long-term license to produce and sell men's and women's collections of DKNY Jeans and DKNY Active in the Western Hemisphere. Liz Claiborne products are sold in department and specialty stores, in the company's own stores and factory-outlets, and on the Internet. Sales in 2006 totaled almost $5 billion, with net income of $254.7 million reported.

After a successful career as a designer with Jonathan Logan, Elizabeth "Liz" Claiborne joined with her husband, Arthur Ortenberg, and two partners to form Liz Claiborne, Inc. in 1976. The plan was to produce stylish, sporty, and affordable clothing for working women. Instead of marketing skirts and pants in one area of the store and tops in another, Liz Claiborne executives worked with retailers to pioneer the concept of presenting all of the brand's related sportswear pieces in one department.

The company was profitable from the first and grew rapidly during the 1980s. The Elisabeth line, introduced for larger women, was particularly successful with sales of $161 million in 1992.

The company also moved into retail sales in 1988, opening its first 13 First Issue specialty stores. Liz Claiborne and Elizabeth stores followed. These stores provided almost instantaneous market research through the use of bar coding and other data systems. Next came Liz Claiborne factory-outlet stores to market unsold inventory.

Liz Claiborne and her husband retired in 1987, but the company continued to introduce new product lines and to expand with ups and downs along the way. In November 2006 William L. McComb joined the company as chief executive officer. Liz Claiborne, Inc., began a structural realignment, concentrating on some brands and considering possible divestitures, discontinuation, or licensing of C & C California, Dana Buchman, Ellen Tracy, Emma James, Enyce, First Issue, Intuitions, J.H. Collectibles, Kensie, Laundry by Design, Mac & Jac, PrAna, Sigrid Olsen, Stamp 10, Tapemeasure, and Tint.

Jones Apparel Group

Jones Apparel Group, with more than $4.7 billion in 2006 sales and $144.1 million in net income, produces a wide range of women's and men's clothing. The company's nationally recognized brands include Jones New York, Nine West, Anne Klein, Gloria Vanderbilt, Kasper, Bandolino, Easy Spirit, Evan-Picone, Norton McNaughton, Erika, l.e.i., Energie, Enzo Angiolini, Joan & David, Mootsies Tootsies, Sam & Libby, Napier, Judith Jack, Albert Nipon, Le Suit, and the upscale department store Barneys New York. The company also markets costume jewelry under the Givenchy brand licensed from Givenchy Corporation and footwear under the Dockers Women brand licensed from Levi Strauss & Co. Its subsidiary, Nine West Group, designs shoes (Easy Spirit, Enzo Angiolini, Bandolino, and Gloria Vanderbilt). Jones owns more than 1,000 retail stores, as well as Barneys.

Stanley Kimmel founded and became president of the Jones Apparel Division of W. R. Grace & Co. in 1970. In 1975 he and a partner bought the company from Grace, and built it into a major power in the apparel business. The company went public in 1991. A number of acquisitions followed. A 2007 shakeup at the top resulted in, among others, Peter Boneparth, president and CEO, and Lynn Cote, CEO of wholesale sportswear, suits, and dresses, leaving. Wesley R. Card was named the new president and COO, and John McClain was appointed as CFO.

It was announced that the firm would exit or sell a number of its moderate lines. Barneys New York was also put up for sale. The new management, however, said it would continue to focus on Ann Klein in a strategy that had been championed by Boneparth and Cote. They named a new creative director, Isabel Toledo, to create a designer collection of hip, modern sportswear sold selectively at certain upscale stores while putting her stamp on the entire line.

VF Corporation

Headquartered in Greensboro, North Carolina, VF Corporation is one of the world's largest clothing companies, with more than 53,000 employees and annual revenues greater than $6 billion in 2005. It primarily manufactures jeans and sportswear. Its 40 brands include Wrangler, Lee, Riders, Rustler, North Face, Vans, Reef, Napapijri, Kipling, Nautica, John Varvatos, Jansport, Eastpak, Eagle Creek, Lee Sport, Majestic, and Red Kap.

VF Chairman and CEO Mackey J. McDonald told Apparel in 2006 that the company was in the midst of transforming from a category apparel business to a growing lifestyle brand company, and that this change had resulted in three consecutive years of record earnings, with 2006 expected to be a fourth.

VF began with the Reading Glove and Mitten Manufacturing Company established in Pennsylvania in 1899. In 1919 the company began making undergarments and changed its name to Vanity Fair Mills. After acquiring the H.D. Lee Company in 1969, Vanity Fair Mills changed its name to VF Corporation. When Blue Bell Inc., with brands such as Wrangler and Jansport, was acquired, the VF Corporation became the largest publicly held apparel company.

Polo Ralph Lauren

Polo Ralph Lauren reported annual sales of $3.3 billion in 2005, 3.75 billion in 2006, and $4.3 billion in fiscal 2007. The company began in 1967 with a collection of neckties by designer Ralph Lauren, who controls most of the voting stock. It designs and markets apparel, accessories, fragrances, and home furnishings, farming out production to a worldwide group of contract manufacturers. The company's brand names include Polo, Chaps, Lauren, and Club Monaco, which are sold at approximately 290 retail and outlet stores in the United States and at licensed stores around the world.

Fruit of the Loom

Headquartered in Bowling Green, Kentucky, Fruit of the Loom is a vertically integrated manufacturer of underwear and casual clothing. The company, which spins its own yarn, weaves or knits its cloth, and then manufactures the finished clothing, was acquired in 2002 by Warren Buffet's Berkshire Hathaway, Inc. Fruit of the Loom is America's biggest seller of men's briefs, and it sells a variety of other underwear for men, women, boys, and girls. Additional products include T-shirts, active wear, casual wear, and children's clothing. Its brands include BVD, Munsingwear, and Gitano, as well as Fruit of the Loom.

The company's history involves two firms—one a textile company and the other a manufacturer of underwear. B.B.& R. Knight Brothers textile company was established in Rhode Island in the mid-nineteenth century. The brothers called their quality broadcloth "Fruit of the Loom," and that name received the 418th U.S. patent after the country's new federal patent and trademark office opened in 1871. As women began buying ready-made clothing and linens, the retail market for cloth declined, and in 1928 the company began to license clothing manufacturers to use the brand name. At about this time, Jacob Goldfarb established the Union Underwear Company. In the late 1930s, he purchased a Fruit of the Loom license and began heavily promoting the name.

Union Underwear was acquired by the Philadelphia & Reading Corporation in 1955. The company had become the dominant producer of Fruit of the Loom products, and in 1961, Philadelphia & Reading acquired the Fruit of the Loom name to protect its use of the brand. The company acquired the BVD trademark in 1976 and began marketing this brand to more upscale stores. A series of expansions and acquisitions followed. Until the 1990s Fruit of the Loom manufactured most of its products within the United States, but at that time it began moving its production out of the country. Fruit of the Loom has more than 60 manufacturing and distribution companies around the world.

MATERIALS & SUPPLY CHAIN LOGISTICS

Material Inputs

Materials used by the apparel industry consist largely of fabric, both woven and knitted, as well as smaller quantities of items such as buttons, zippers, and elastic. While the apparel manufacturing industry in the United States has largely been supplanted by lower-cost off shore contract firms, the textile industry continues to be an important source of U.S. manufacturing employment. While an apparel manufacturing enterprise can be set up in a third-world country with little capital investment beyond a few sewing machines, textile mills require far larger capital outlays, more advanced technology, and employees who understand the technology.

A study of competitiveness in the textile industry during the years 1989–2001, published by Competitiveness Review in Winter 2006 and titled "Regional Trade Pacts and the Competitiveness of the U.S. Textile Industry," reported that the industry was the third largest U.S. manufacturing industry, but that it was under severe pressure from foreign competition. Census figures show that in 2002, there were 3,932 textile mill employers in the United States with 269,064 employees. They shipped almost $45.65 billion in products in 2002.

Both textile and apparel manufacturing have been the subject of a series of contentious trade negotiations. The phasing out of the Multifibre Arrangement of 1974 put pressure on both industries by the end of the twentieth century. Pressure increased in 2002, when China joined the World Trade Organization, with a series of safeguard quotas due to expire in 2008.

The importing of textiles into the United States resulted in job losses, with as many as 100 plant closings in 2001. The industry responded in two ways in the first decade of the twenty-first century. First, textile manufacturers achieved higher productivity with technology upgrades. Second, regional trade pacts led to realigned markets. Regional partnerships, encouraged by the trade agreements, cut transportation time and costs and built markets for U.S. textiles. Neighbor countries could ship apparel into the U.S. duty-free as long as the products were made with U.S.-produced fabric or yarn under the North American Free Trade Act (NAFTA), Central American Free Trade Act (CAFTA), and the Caribbean Basin Initiative (CBI). U.S. textile imports in real dollars doubled from $5 billion in 1989 to a little over $10 billion in 2001. U.S. textile exports increased from $2.83 billion in 1989 to nearly $9 billion in 2001.

U.S. International Trade Commission data on textile mills do not correlate directly with the data used in "Regional Trade Pacts and the Competitiveness of the U.S. Textile Industry." Nonetheless, they show that from 2001 to 2006, the textile industry held its own. Textile imports went up from $6.34 billion in 2001 to $7.36 billion in 2006. Exports, however, went up enough to keep up with the rising value of imports, from almost $7.37 billion in 2001 to $8.52 billion in 2006.

The effects of these changes on the apparel industry are complex. Protecting U.S. textile production would seem to drive apparel costs up, but supporters of the trade policy note that the agreements have allowed the industry to contract with companies in neighboring countries where labor costs are lower and then import the finished goods without paying any tariff. In addition, having garments made in nearby countries such as Mexico with lower transportation time and costs, not only saved money on shipping; the arrangement supported just-in-time inventory systems that allowed substantial savings from inventory costs and waste from excess.

Supply Chains

Apparel has a complex supply chain. As with many consumer goods, clothes are consumable products that are replenished regularly. Apparel, however, is dependent on fashion and season and is generally not replenished in the same way as, for example, shampoo. Retailers want apparel made on the basis of forecasts, and with seasonal items, products must be on time. Apparel vendors must forecast trends and quantities weeks or months before it is due on the retailer's shelf, factoring in manufacturing time.

This was difficult with domestic factories, but with most manufacturing moved offshore, it has become even more complex. Clothing companies often contract with a number of factories in several different countries. Forecasts must take into account shipping and customs processing in addition to manufacturing times.

Attention to the working conditions in the maufacturing facilities producing products under contract for large global firms rose during the later years of the twentieth century and the beginning of the twenty-first. Some companies have come under severe criticism for working conditions in factories run by the companies with whom they contract in the developing world. Several have adopted codes of vendor conduct in an attempt to address this problem. In addition to vendor codes of conduct, companies are including other working condition clauses into the contracts they enter with manufacturing subcontractors. Gap, Inc., for example, reported that it is attempting to manage its supply chain so that factories are not forced to require excessive overtime to meet last-minute orders or changes.

Major carriers such as FedEx, UPS, and DHL solve some shipping and custom problems by providing managerial expertise while allowing small businesses in the exporting country to connect with the global economy. Services such as FedEx, however, concentrate on shipments of high-value goods with a critical need for speed to market, including high fashion apparel. When costs are critical, countries where transportation is fast and inexpensive have an advantage.

To manage the supply chain, major clothing companies consider countries like India, Vietnam, Indonesia, and other developing nations for apparel contracts. Although Chinese products are often least expensive, clothing companies need to hedge their bets by building diversification into the supply chain. Wal-Mart, for example, makes it clear that it must have a steady and geographically diverse supply system for its products.

DISTRIBUTION CHANNEL

The distribution systems used to get clothes from where they are made to the retail outlets from which they are sold changed in recent decades with the expansion of globalization. One of the largest U.S. shakeups of this distribution channel came in August 2005 when Federated Department Stores acquired the May Department Stores, which included Macy's and Bloomingdales. This and other consolidation deals increased competition in the apparel business because they resulted in fewer stores and less shelf space, while at the same time retailers were filling more of that space with store brands.

In 2007 clothing was sold in department stores, specialty stores, discount stores, warehouse stores, and warehouse clubs like Costco and Sam's. The apparel makers also marketed products in their own retail stores and factory outlets, from catalogs, and on the Internet.

Cotton Incorporated, an industry group, conducted a Global Lifestyle Monitor survey in 2006, which included a survey of 4,000 U.S. consumers aged 15 to 54. The sur-vey showed that U.S. consumers spend an average of $918 a year on apparel, buying 27 percent from department stores, 22 percent from chain stores, 19 percent from mass merchants, and 14 percent from specialty stores. When asked what was the most important factor when buying clothes, 77 percent said price.

In 2003 Chain Store Guide, a division of Lebhar-Friedman, conducted a study of 123 retailers operating 40,000 stores in 346 markets. The study concluded that discount apparel retailers had made dramatic gains in market share, accounting at that time for $70.2 billion of an estimated $182 billion apparel market. Wal-Mart held 24.6 percent of the $70.2 discount market. Other major discounters were T.J. Maxx/Marshalls (10.1 %), Target (8.4 %), Old Navy (7.8 %), Kmart (6.1 %), Ross (3.8 %), Charming Shops (3.2 %), Burlington Coat Factory (2.7 %), American Eagle Outfitters (1.9 %), and Value City Dept. Stores (1.7 %).

Harvard Business School conducted a study of the textile and apparel industries in 2000 to look at the potential of e-commerce. That study, supported by the Sloan Foundation, reported 1999 retail channels for an apparel and accessories business estimated at $179.8 billion as follows:

• Discounters, 20.5 percent
• Specialty stores, 22.4 percent
• Department Stores, 19.1 percent
• Major chains, 16.2 percent
• Off-price retailers, 6.5 percent
• Factory outlets, 3.7 percent
• Catalog, 9.6 percent
• Online, 0.6 percent
• Unreported, 1.4 percent

That study said the apparel industry could be segmented historically in several ways. When considering cost, a large segment of the industry competes on low cost, buying goods from distant suppliers and cutting costs by ordering and shipping in large lots. Such clothing was generally sold through mass merchants such as Kmart or Wal-Mart or at lower-end specialty stores and was a substantial part of the children's clothing market. Other firms chose higher costs for better quality, more fashionable goods. These companies generally sold through department stores or high-end specialty stores.

Between 1999, the time of the Harvard study, and 2007, clothing sales on the Internet grew at an impressive rate. A study by Forrester Research, Inc. showed that the apparel, accessories, and footwear category had reached $18.3 billion in online sales in 2006 and was expected to exceed $22 billion in 2007. Ten percent of all clothing sales made in the United States were expected to be made online by 2010, the Forrester Research report said.

KEY USERS

All women wear clothing, but some spend much more on apparel than others. From the point of view of a clothing manufacturer or retailer, a fashion-savvy woman with a closet full of the latest styles is far more a key user that a casual dresser who prefers jeans and T-shirts most of the time. Women's interest in clothes can be traced to a number of factors including age, economic level, job requirements, social life, interest in fashion, and even personal vanity.

ADJACENT MARKETS

The fabric and apparel industries are closely tied, with U.S. government trade policy attempting to create markets for the domestic textile industry. This was done by treating apparel imports from neighboring countries leniently as long as the garments coming into the United States had been made using thread or fabric made in the United States. Wholesale fabric purchases by apparel manufacturers have been important to the textile industry ever since American women stopped making most of the family clothing and began buying ready-made garments.

A wide range of women's accessories are adjacent markets to women's apparel since they compete for the clothing dollar. They include jewelry, handbags, belts, gloves and mittens, hats, and sunglasses. In 2007, WWD reported the percentage share of the women's accessories market during the first quarter for a number of these items.

Earrings were in first place with 21 percent of the overall women's accessories market. Handbags came next with 11 percent, followed by: chains/necklaces (8%); bracelets/anklets (5%); rings (5%) percent; knit gloves/mittens (5%); sunglasses (4%); wallets (3%); belts (2%); and cold-weather hats (2%).

One chief industry analyst of the NPD group, which conducted the survey explained, "This business has gone topsy-turvy in a great way." Accessories have become so important that apparel has practically become the accessory item to an accessory purchase. A good example is purses. Sales of designer purses soared with prices in the mid-thousands. Hermes was offering an alligator bag with a price tag of $148,000 in 2007.

Footwear is adjacent to apparel, as evidenced by the existence of the American Apparel and Footwear Association. The apparel market is driven by demands of fashion, and changes in apparel styles may influence shoe design and vice versa. Many apparel designers also sell shoes, resulting in fluidity between the two closely adjacent markets. Both apparel and shoe marketing depend heavily on brand recognition or brand loyalty, and when a brand is successful, it may spread across categories. The Gap, Inc., for example, launched a shoe Web site in October 2006.

RESEARCH & DEVELOPMENT

The Competitiveness Review 2006 article on the U.S. textile industry concluded that "product innovation is a key to counteracting shrinking export markets….The recent use of nanotechnology, shuttleless looms, and robotics in textile manufacturing and the creation of 'smart' fabrics are examples of ways to counter global competition." To help the apparel and textile industries survive in a highly competitive global environment, research and development is conducted both by non-profit industry and education centers and by individual companies.

Cotton, Inc., for example, is a non-profit industry group funded primarily by U.S. cotton producers. Its research center in Cary, North Carolina, deals with all stages of cotton production. Its agricultural research improved farming practices to enable the production of more cotton on less land. Other initiatives look at such subjects as harvesting and ginning of cotton, fabric development, dyeing, and finishing. The organization monitors the global textile marketplace, advances in textile chemistry and processes, and consumer attitudes. Initiatives in 2006 included new programs to convince both Chinese customers and college-age Americans of the benefits of wearing cotton clothing. In response to concerns about global warming and sustainability, another new program attempted to educate the public about improvements in cotton growing that reduce its environmental impact.

Supply chain management is a central concern of the Textile Clothing Technology Corporation, or [TC2], also located in Cary, North Carolina. [TC2] is a not-for-profit organization that operates a demonstration center for leading edge technologies and a research facility for emerging technologies and business processes in the sewn goods and related soft products industries. At its demonstration center, sewn products are developed in a totally digital environment that often eliminates the need to make a physical sample and reduces cost, risk, and time when compared with the traditional product development process. Digital textile printing makes mass customization possible, bypassing the screen making process and enabling quick changes to color or design elements before printing. To enable custom fitting, the organization has also pioneered body scanning technology using white light.

The Harvard Center for Textile and Apparel Research, funded by the Alfred P. Sloan Foundation, conducts studies of how technology is transforming the way retailers plan and order merchandise as well as how manufacturers forecast demand, plan production, and manufacture and distribute their products.

Clemson Apparel Research is another university center that studies the textile and apparel industries. It describes itself as a "premier national resource for high-performance textiles and related materials research and applications." In one program, the center developed BalancedFlow, which addresses supply chain issues with software Clemson says is designed to minimize the number of days required to convert money invested in inventory into new money coming from consumers at the end of the supply chain.

One technology that has been useful is RFID (radio-frequency identification). RFID tags on merchandise help manufacturers and retailers keep track of products during shipping and receiving and make possible automated replenishment of stock.

Another futuristic apparel industry technology offers better fitting clothing. Intellifit has commercialized body-scanning technology, and it works with a number of retail brands to help customers find the right sizes. In virtual fitting rooms, now available in some major retail centers and at promotional events, a three-dimensional body scan takes measurements from over 200 places on a customer's body, using low-power radio waves that travel through clothing. The system then analyzes the information to offer suggestions on what clothing sizes would fit best. In mid-2007, a customer could use a password to access his own information on Intellifit's Web site to order men's custom-fit jeans, polo shirts, pants, and shirts from such companies as Polo, Nautica, Lands' End, Gap, and Dockers. It was expected that women's apparel items would soon be added to the Web site as well. Intellifit was also beginning to install virtual fitting rooms at major airports, so customers could have their data entered into the system while they were waiting for planes.

CURRENT TRENDS

The big trend in women's clothing at the end of the first decade of the twenty-first century is the return of the dress. The sale of dresses was in decline for most of the decade, through 2006. The NPD Group, a marketing research firm, reported that in the 12 months ended in April 2007, sales of women's dresses rose 30.4 percent to more than $5 billion. During the same period, overall women's apparel sales rose at only 5.1 percent. During the same period the year before, dress sales had declined 9.4 percent.

Junior dresses led the trend. They increased 21.2 percent in the year ending April 2006. The next year, junior dresses increased 53.3 percent. The survey found that dress sales were up in 2007 in all tiers of retail distribution: 51.7 percent in specialty stores, 45.7 percent in national chains, 33.3 percent in department stores, 14.1 percent in mass merchants, and 12.1 percent in off-price merchants.

Environmental concerns fueled another trend, sustainable fabrics. The Organic Exchange, a nonprofit organization, reported in early 2007 that global sales of organic cotton products jumped from $245 million in 2001 to $583 million in 2005. The group projected that sales would reach $2.6 billion by the end of 2008. NPD reported in June 2007 that 18 percent of customers surveyed said they were interested in buying eco-friendly products compared to only 5 percent in 2000.

Even mainstream firms such as Levi Strauss jumped on the organic trend, introducing in 2006 a sustainable jeans line called Levi's Eco with jeans made from organic cotton and waistband buttons from coconut shells. Reinforced stitching replaced metal rivets, and the hang-tag was made from recycled board. Meanwhile, Patagonia, an outdoor apparel manufacturer that uses only organically grown cotton, received property tax abatements from Nevada for building a green distribution center with greatly reduced energy and water usage and improved storm water management.

In another current trend, apparel companies dealt with a battle of brands and fought for shelf space fueled by the reduction in retail outlets as consolidation continued in the U.S. retail sector, culminating in 2005 with Federated Department Stores' purchase of May Department stores. One result was an increase in the number of stores and outlets owned by manufacturers such as Liz Claiborne. Jones Apparel decreased its department store sales from 80 percent of its total 10 years before to 20 percent in 2006. The company instead increased business with lower end retailers such as Kohl's and opened more of its own retail stores. Jones Apparel has more than 900 retail outlets for its brands.

The competition between designer lines for shelf space was particularly fierce, although the market for designer clothing remained strong. Polo Ralph Lauren and Calvin Klein were in the top five best-selling women's apparel lines in the 12 months that ended May 2007, according to the NPD Group. Of the $104 billion women spent on apparel during that period, $7.2 billion, or approximately 7 percent, was for designer clothes. Mass merchants such as Target and H&M also reported strong sales in designer lines.

TARGET MARKETS & SEGMENTATION

The women's apparel market totaled $104 billion during the year that ended May 31, 2007, according to the NPD Group. Clothing manufacturers and retailers went after various segments of that market in a variety of ways.

Designer fashion was attractive to many women, who spent $7.3 billion that year for designer clothing. Polo Ralph Lauren and Calvin Klein, known for higher priced merchandise, were among the top five best-selling women's apparel names.

Liz Claiborne led the list, but that company no longer concentrates solely on the upscale market. In 2007 Liz Claiborne owned 43 brands, each designed to target a specific group of women, and such diversity was a key part of the corporate strategy under CEO Paul Charron. Under his leadership, the number of Liz Claiborne brands increased ten-fold. Instead of concentrating solely on contemporary fashion at the higher end, represented by the Liz Claiborne brand, the company found profitability in other market segments as well. After Charron took over in the mid-1990s, the percentage of sales from department stores dropped from 90 percent to 30 percent and the Liz Claiborne brand dropped from representing 90 percent of the company's sales to approximately 22 percent.

Jones Apparel followed a similar path, decreasing its reliance on department stores from 80 percent to 20 percent, increasing business with lower-end retailers such as Kohl's, and opening more of its own retail outlets. While Liz Claiborne had brands in 2007 for every taste and pocketbook, Jones was in a weaker position with brands concentrated on the moderate tier where price competition is heaviest.

Gap, fighting aggressively to overcome disappointing earnings seen in the middle of the first decade of the 2000s, moved into the high-fashion segment, introducing Gap Design Editions, a limited-edition series from designers Doo-Ri Chung, Thakoon Panichgul, and others.

Wal-Mart, struggling with women's fashion, announced in August 2007 that it had acquired the Ocean Pacific and Op brands in an exclusive deal with Iconix Brand Group. The well-known brands, pioneers in the surf and beach apparel industry, had been sold in upscale stores and later in department stores. Ocean Pacific and Op clothes, expected to appear in Wal-Mart stores in spring 2008, were added to draw youthful, fashion-conscious shoppers into Wal-Mart's apparel aisles.

A number of companies target working women. Talbots, which sells mainly through its own stores, produces tailored outfits designed primarily for women 35 and older. To broaden its market, the company acquired J. Jill in 2006, which also sells to older women but concentrates on looser natural fabrics for more figure-forgiving silhouettes.

AnnTaylor Stores, a specialty retailer of women's career and casual separates, dresses, tops and weekend wear, as well as shoes and accessories, announced in August 2007 that it would concentrate on the modern Baby Boomer, a group the company felt was undeserved.

Performance athletic gear is a growth area for women's apparel because of the increased number of women participating in various sports. The number of female run-ners, for example, totaled 11.5 million in 2004, compared to 10.1 million in 1999, according to one report. Columbia Sportswear CEO Tim Boyle told Apparel magazine in 2007 that the company provides value at all price points from a $35 pair of shorts to a $600 parka and that it sells to a variety of retailers, helping it to reach more market segments.

In the early 2000s jeans continued to be an important part of the women's apparel market, with $7.41 billion worth of jeans sold in the year ending in March 2007, according to the NPD group. The marketing of jeans is usually done by first segmenting the target market into groups by age, then income.

A rapidly growing market segment for men, women, and even youths is plus-size clothing. In 2007 just-style reported that while U.S. apparel sales growth had slowed to around 3 to 4 percent per year, the plus-size market was expected to grow at least 10 percent a year, reaching $62 billion in 2012. Deb stores, which cater to junior women, offers plus-size departments in more than half of its stores.

One market segment that can be counted on every fall is college students as they head back to school. The National Retail Federation (NRF) estimated that 2007 back-to-college sales would total $47.3 billion, with $7.41 billion of that going for clothing and accessories.

For apparel, as it is for most retail industries, Christmas is the biggest single selling opportunity of the year in the United States. Mother's Day is also important. In October, 2006 the NPD group conducted a survey that showed that 65 percent of customers were planning to buy clothing for Christmas gifts, and that 64 percent had done so in 2005. By mid-December 2006, the NRF reported that 47 percent of shoppers had already bought clothing. The NRF's 2007 Mother's Day survey showed that consumers planned to spend $15.73 billion on gifts for mothers or an average of $139.14 each. Of that, $1.6 billion would go for clothing and accessories.

RELATED ASSOCIATIONS & ORGANIZATIONS

American Apparel and Footwear Association, http://www.apparelandfootwear.org

Clemson Apparel Research, http://car.clemson.edu

Cotton Inc. http://www.cottoninc.com

The Harvard Center for Textile and Apparel Research, http://www.hctar.org

National Retail Federation, http://www.nrf.com

[TC]2 (Turning Research into Reality), http://www.tc2.com

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see also Athletic Shoes; Children's Apparel; Men's Apparel; Shoes, Non-Athletic